LG Electronics Levant severs business ties with Darwish Khalili and Sons Company

LG Electronics Levant announced on Wednesday that it has terminated all commercial ties with Darwish Khalili and Sons Company (DKSC) and its Middle East Complex for Engineering Electronics and Heavy Industries (MEC). In an advertisement published on front pages of Arabic dailies, the giant Korean company said that as of July 19, 2010 it has stopped supplying DKSC and MEC with products to be marketed in Jordan. According to LG Electronics, financial straits faced by MEC, which is owned by Khalili family, were behind terminating the distribution contract. A senior director at LG told The Jordan Times that because Khalili owed LG around $7 million last year and was unable to make new orders, a new distributor has taken over. Asked why LG was late in publishing the announcement, he indicated that there were some arrangements to formalise a commercial partnership between the new distributors of LG products and DKSC but such a deal did not work out. The LG official, who preferred anonymity, stated that a dispute between LG and DKSC erupted after the latter brought some smuggled electronics from Dubai to market them in the Kingdom although DKSC was the exclusive distributor for LG Electronics products in Jordan for many years. He said that New Vision, the new distributor in Jordan, bought MEC’s LG factory which manufactures electronic devices such as TVs, audiovisual electronic devices, home appliances such as washing machines, dishwashers, vacuum cleaners, microwaves and blenders. MEC owns several factories for other brands such as Daewoo and Haier. New Vision, according to the director, is a Jordanian company, 50 per cent of its shares owned by Saudi-based Shaker Group, which is listed on the Saudi stock market. In March, 15 local and international banks agreed to reschedule MEC’s JD103 million of debts for repayment over five years with a two-year grace period at 5 per cent interest rate on loans offered in US dollar and 6 per cent on credit facilities in Jordanian dinar. The Jordan Times tried to contact Osama Khalili, MEC chairman, to comment on the issue but he was not available.